Increased foot traffic and off-premise sales were other factors behind the brand's resurgence last year. But hats off to IHOP's marketing team.
— Danni Santana
IHOP returned to positive same-store sales in 2018, thanks to increased foot traffic, off-premise sales, and its new burger rollout last summer, the chain announced during Dine Brands’ fourth quarter earnings call, Thursday.
The casual dining subsidiary disclosed comparable store sales growth of 3 percent for the period, as well as a 1.5 percent uptick for the year. Total revenue also jumped by nearly 4 percent, marking the brand’s best overall performance since 2015.
“We believe there are several drivers that will contribute to sustainable positive sales,” IHOP President Darren Rebelez told investors. “We successfully changed the narrative regarding lunch and dinner occasions at IHOP. With abundant value and variety on our menu, we proved that we can attract guests any time of the day.”
Breakfast will always be IHOP’s main focus, but the company sees an untapped opportunity at lunch and dinner that gives it room to grow. According to Rebelez, burger sales remained strong in the fourth quarter, and are still at more than double the levels the chain sold prior to its IHOB campaign in June.
Another Delivery Partner
Off-premise is another growth opportunity for IHOP. For the quarter, to-go same-store sales ballooned by 23 percent, driven double-digit traffic growth of 13 percent at a time when many across the industry are still struggling with the metric.
IHOP launched its national delivery program with DoorDash in select locations last July. The company has since tripled the number of participating locations, now at 1,000 outposts, with another 300 planned in 2019. IHOP will also be looking to add another delivery partner to its portfolio, it says. The chain’s IHOP and Go Program accounts for 8 percent of overall sales.
“With the increasing relevance of online ordering, we believe there is significant upside potential,” Rebelez said. “Our online ordering system, enhanced website, and new mobile app have all created a complete omni-channel experience for our guests. And best of all, online ordering isn’t just more efficient, it’s more profitable.”
Expanding and Remodeling
While IHOP’s sister company Applebee’s continued to shed unprofitable restaurants in 2018, IHOP opened 45 new units last year, including 11 internationally.
The chain is currently testing its Rise N’ Shine remodel, which includes more accurate wait times for customers as well as wireless credit card readers that allow guests to pay without handing credit cards over to staff.
A total of 275 remodels were completed last year, bringing the total number of restaurants with the Rise N’ Shine image to over 1,000, when combined with new restaurants openings. IHOP has more than 1,800 stores globally.
Dine Brands expects comparable store sales for 2019 to fall between 2 percent and 4 percent for both IHOP and Applebee’s. The latter reported same-store sales growth of 3.5 percent in the fourth quarter, buoyed by off-premise sales, marketed promotions, and higher store traffic.
“My initial full year as CEO of Dine Brands was a transformative year for the company. We stayed the course and executed against a multi-pronged strategy focused on returning Dine Brands to a growth company,” said CEO Stephen Joyce, Dine Brands’ CEO. “With the performance-driven value-based culture firmly in place, I’m very confident in our go-forward plans.”